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World agricultural trade flourishes despite Coronavirus pandemic

04 September 20203 min reading

The WTO Secretariat has published a new information note examining the impact of the COVID-19 pandemic on world agricultural trade. The paper notes that agricultural trade has fared better than other sectors, and that initial measures focused on guaranteeing the immediate availability of food have been followed by a second phase of policies seeking to mend broken supply chains and help producers to cope with the “new normal” situation.

While overall merchandise trade fell sharply in the first half of 2020, agricultural and food exports increased by 2.5 per cent during the first quarter of the year compared to the same period in 2019, with further increased in March and April. However, the crisis has exerted further downward pressure on food prices. Food prices were already on a downward trend at the beginning of 2020. The COVID-19 crisis exerted further downward pressure on prices, and therefore on producer revenues. Although June saw the first increase in world food prices since the beginning of 2020,  prices are expected to remain at low levels amid the economic downturn.

Impacts have varied across regions. Asia saw its agricultural exports decline in March 2020, followed by Europe and North America in April. But some regions have seen exports increase compared to the same period in 2019, with the biggest increases in South America, driven by Asian demand for the region’s exports of products such as soybeans, sugar and meat.

In addition, while world food stocks and production levels for the most widely consumed staples — rice, wheat and maize — are at or near all-time highs, the COVID-19 pandemic’s impact on jobs and incomes has increased the number of hungry people worldwide. According to the World Food Programme’s most recent estimates, 270 million people could be acutely food-insecure by the end of 2020, representing an 82 per cent increase from before the pandemic. Producing and storing enough food is not sufficient if it does not reach those in need. By contributing to the availability and affordability of food, trade remains a crucial part of the solution to countries’ food security concerns — particularly at a moment when people’s incomes are under pressure. It is therefore critical to keep trade flows open, and to ensure that food supply chains stay operational.

The paper warns that countries are still fighting the pandemic, and its repercussions for food supply chains are still unfolding.  While there is currently no reason why the ongoing health crisis should turn into a food crisis, disruptions to food supply chains constitute a risk, with governments’ trade policy choices likely to determine how the situation evolves.

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